MW Nasdaq falls back into correction territory as S&P 500 tests a 'line in the sand.' Watch these levels.

By William Watts

Stocks slump on tariff jitters and unease over outlook for artificial intelligence

The tech-heavy Nasdaq was facing a sum-of-all-fears type selloff Thursday, testing correction territory as stock-market investors fretted over the threat of a global trade war, and as results from Marvell Technology Inc. sparked renewed worries over the artificial-intelligence trade, despite beating earnings expectations.

The Nasdaq Composite COMP was down 462 points, or 2.5%, near 18,089 in afternoon activity. A close below 18,156.50, a level that marks a 10% fall from its record close of 20,173.89 set on Dec. 16, would meet the widely used definition of a market correction. The index briefly traded in correction territory on Tuesday before trimming losses. A correction turns into a bear market with a pullback of 20% from a high.

Marvell's stock $(MRVL)$ tumbled nearly 18%, sparking weakness across chip stocks, as investors appeared disappointed in the company's revenue guidance, "curbing enthusiasm among investors banking on continued strength from the AI boom," according to a note from Fawad Razaqzada, market analyst at City Index and Forex.com.

Meanwhile, Broadcom Inc. $(AVGO)$, another key player in the AI boom, saw its shares decline more than 5% ahead of its earnings release. Shares of Nvidia Corp. $(NVDA)$, the darling of the AI boom, were down 4.7% and have shed more than 10% so far this week to wipe out six months of gains.

Other indexes were also sharply lower, with the S&P 500 SPX down 2.2% at 5,717, trading below important chart support at its 200-day moving average near 5,731. A break below the average, seen as a proxy for the long-term trend, could spark further selling and more downside, analysts have warned.

"It remains the line in the sand for risk, and just as we saw in August 2024, the market knows that nothing good happens below the 200-day MA," noted Chris Weston, head of research at Australia-based brokerage Pepperstone.

See: Friday could be a critical day for investors, with a high-stakes jobs report and a Powell speech

Stocks were seeing renewed pressure on fears rising global trade tensions could spark a major economic slowdown or even a recession. Losses were trimmed after President Donald Trump, in a social-media post, said that 25% tariffs on imports from Mexico imposed on Tuesday will be paused until April for "anything that falls under the USMCA," referring to the U.S.-Mexico-Canada Agreement on trade. Investors were waiting to see if a similar deal would be in the offing for Canada.

A close below 5,529.74 would mark a correction for the S&P 500, which ended Wednesday 4.9% below its record close of 6,144.15 set on Feb. 19.

The Dow Jones Industrial Average DJIA was off 535 points, or 1.2%, at 42,472. A close below 40,512.64 would mark a 10% fall from its record finish of 45,014.04 set on Dec. 4.

-William Watts

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March 06, 2025 14:07 ET (19:07 GMT)

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